Slide 1: Interim Results 2007
Interim Results 2007 2 March 2007
Slide 2: Highlights – Six Months to 28 January 2007
Highlights – Six Months to 28 January 2007 • Turnover up 8% to £438.4m • Operating profit up 17% to £46.3m • Profit before tax up 20% to £32.9m • Earnings per share up 37% to 14.5p • Free cash flow per share 17.0p (2006: 16.8p) • Dividend per share 4.0p (2006: 1.6p) 2
Slide 3: Average Sales Per Pub Week
Average Sales Per Pub Week (including VAT) £000 30.7 31.0 30.0 29.0 29.0 28.0 28.2 28.0 26.4 27.0 26.0 24.7 25.0 24.0 23.0 22.0 21.0 20.0 2002 2003 2004 2005 2006 2007H1 Record level of weekly sales 3
Slide 4: Like for Like Sales/Profits
Like for Like Sales/Profits % H1 2007 2006 2005 2004 Bar 5.8 2.2 (1.4) 2.9 Food 9.8 3.6 2.1 4.2 Machine 6.4 (1.4) (2.4) 6.1 Total sales 7.4 2.0 (0.6) 3.4 LFL Profits 7.7 5.9 (4.0) (0.7) 4
Slide 5: Pub Operating Margin
Pub Operating Margin • Gross margin improvement • Wages - pay rates - bonus payments • Operating costs - utilities (+£3m) - rent/rates stable Increase of 70 basis points 5
Slide 6: Operating Margin - Summary
Operating Margin - Summary H1 H1 H1 H1 FY 2007 2007 2006 2006 2006 £000 % of £000 % of Sales Sales Turnover 438,374 - 406,326 - - Pub Operating Profit 86,372 19.7 77,320 19.0 19.2 Head Office Costs (17,040) (3.9) (15,681) (3.9) (3.9) Share Incentive Plan (1,352) (0.3) (811) (0.1) (0.3) Depreciation
Slide 7: Non-smoking Pubs (England and Wales)
Non-smoking Pubs (England and Wales) • 39 converted pubs and 22 new openings • Sales recovery in 1-2 years • Profit recovery circa 2+ years • New pub performance encouraging • Continued progress over time Experienced in operating non-smoking pubs 7
Slide 8: Non-smoking Scotland
Non-smoking Scotland • 39 pubs • Investment in facilities/service • Sales +5% - encouraging bar sales - double digit food growth - machines flat • Profits broadly in line with last year First year results ahead of expectations 8
Slide 9: Cash Flow
Cash Flow H1 H1 FY 2007 2006 2006 Cash from operations 60,273 60,826 133,366 Interest and tax (23,101) (22,350) (37,963) Re-financing costs - (1,367) (1,412) Investment in existing pubs (10,548) (6,695) (20,810) Investment in own shares (SIP) (1,053) (1,765) (3,469) Free cash flow 25,571 28,649 69,7
Slide 10: Allocation of Resources
Allocation of Resources New Pubs Share Dividends Buybacks Debt repayment 10
Slide 11: Expansion Plans
Expansion Plans • 2006 9 new pubs • 2007 20 planned • 2008+ 30 target • Strong cash flow • Strong pipeline Maintain target return on investment 11
Slide 12: Dividends
Dividends • +10% per annum since IPO in 1992 • Considered options • Substantial adjustment taking into account sector and market dividend cover – H1 1.6p 4.0p Prudent level of pay out 12
Slide 13: Share Buybacks
Share Buybacks • £234m since 2003 • 34% equity retired • Flexibility on cash allocation Continue to monitor future opportunities 13
Slide 14: Debt Position
Debt Position H1 H1 FY 2007 2006 2006 Net debt/ EBITDA 2.8 2.8 2.8 Interest cover (times) 3.5 3.2 3.3 Fixed charge cover (times) - statutory 1.8 1.7 1.8 - excluding 2.4 2.3 2.3 depreciation Continued improvement in ratios 14
Slide 15: REITS
REITS • Short term financial benefits • Consistent with long term strategy? • Real estate versus tax savings • Monitor / explore opportunities 15
Slide 16: ROC/CROCCE/ROE
ROC/CROCCE/ROE H1 H1 2007 2006 • P&L return on capital 11.8% 10.2% • Crocce 12.3% 11.5% • P&L return on equity 19.5% 14.0% • Cash return on equity 15.6% 13.9% Improvement in financial returns 16
Slide 17: Trading Performance
Trading Performance • Sales growth continues • Margin improvement • Prepared for non-smoking 17
Slide 18: Joseph Bramah, Barnsley
Joseph Bramah, Barnsley 18
Slide 19: Jack Fairman, Horley
Jack Fairman, Horley 19
Slide 20: The Blacksmith’s Forge, Dalkeith
The Blacksmith’s Forge, Dalkeith 20
Slide 21: Unrivalled Product Range
Rum », Havana Club Afejo Blanco 375% ABV Lamb's Navy 4 Bacardi 375% ABV Appleton White 375% abv Havana Club Anejo tspecial 40% ABV Wray & Nephew 63% anv Havana Club 17-year-old 40% ABV a : ——_ a Cognac w WBROWKA Z STOLICHNAY fi st to Martell vs 40% aay Hennessy Fine de Cognac 40% ABV Gin Gordon's 37
Slide 22: Real Ale Focus
Real Ale Focus • Over 33 million pints per annum • Links with 450 local brewers • Highest company recognition in CAMRA Good Beer Guide 2007 • Worlds largest beer festivals 22
Slide 23: Food Development
Food Development • Improved provenance • Healthier options • Continued success of ‘club offers’ • 50% of sales linked to food • 26% of total revenue 23
Slide 24: Bonus and Share Schemes
Bonus and Share Schemes • £9.0m bonus in H1 (90% to pubs) • £1.1m in share purchases (£23m total pot) • Average annual bonus to managers £9,200k* • Average annual bonus to pub staff £1,500k* *including shares 24
Slide 25: Continued Investment in Facilities
Continued Investment in Facilities • Non-smoking plans • Cold beer • Kitchen upgrades • Coffee machines • £60m spend on repairs / capital in existing estate Ongoing quality improvements 25
Slide 26: Cold Beer / Wine Investment
Cold Beer / Wine Investment 26
Slide 27: 2007 H2 Issues
2007 H2 Issues • More stretching comparatives • H2 sales expectations (2%-4%) • England/Wales/N. Ireland non-smoking • Cautious trading outlook 27
Slide 28: Outlook
Outlook • Continue to improve all areas of the business • Ongoing expansion plans – Strong pipeline of sites • Non smoking – Short term change – Longer term impact Confident of future prospects 28
Slide 29: Appendices
Appendices A - 10 Year Financial Graphs B - 10 Year Trends C - Capital Trends D - ROC/CROCCE/ROE Calculations 29
Slide 30: 10 Year Summary
Appendix A 10 Year Summary Number of Pubs Average Sales Per Pub Week (including VAT) 643 655 657 662 635 608 £000 630 32 30.7 30 29.0 522 28.0 28.2 28 26.4 480 428 26 24.7 23.5 24 22.7 327 22 20.4 330 19.2 19.7 20 252 18 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 H1 194 2007 180 1997 1998 199
Slide 31: JDW - Financial Trends
Appendix B JDW - Financial Trends H1 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sales per pub (£000) 872 904 1,004 1,040 1,093 1,169 1,239 1,246 1,283 1,359 EBITDA per pub (£000) (1) 184.9 188.0 203.8 205.9 207.4 201.9 204.4 195.7 205.6 224.8 Number of pubs 252 327 428 522 608 635 643 655 657
Slide 32: Capital Trends
Appendix C Capital Trends H1 1999 2000 2001 2002 2003 2004 2005 2006 2007 Size (sq.ft.) – openings 3,037 3,217 3,713 3,808 3,721 4,317 4,176 3,637 4,203 Number of openings 84 101 94 87 45 28 13 9 8 % which are freehold 58 67 75 53 56 43 54 22 63 Freehold average cost (£k) 427 465 506 597 511 640 873
Slide 33: ROC/CROCCE/ROE
Appendix D1 ROC/CROCCE/ROE H1 H1 2007 2006 £000 £000 Profit after tax (e) 21,743 18,072 Add: interest (f) 13,398 12,339 Profit pre-interest (g) 35,141 30,411 Add: deferred tax 1,157 908 Depreciation 21,920 21,136 Cash return (h) 58,218 52,455 • P&L return on capital [(g)/average (c)] 11.8% 10.2% • C
Slide 34: ROC/CROCCE/ROE
ROC/CROCCE/ROE Appendix D2 H1 FY 2007 2006 £000 £000 Shareholder funds per balance sheet 185,840 201,575 Add: cum losses on disposal 13,884 13,884 : hedging provision 15,603 15,156 (a) 215,327 230,615 Add: net debt (b) 385,844 355,631 Capital employed (c) 601,171 586,246 Add: deferred tax provision